Fairness

The Bright Side of Debt writes about her struggle to pay off a series of medical bills incurred when her husband was sick. I naively asked her whether she had health insurance -- she does, but it's a policy that requires that she pay 20% of all the costs -- in this case about $4,500.

Our policy, which costs us about $4,000 per year (and my employer another $16,000 or so), has $20 office copays, a $250 inpatient admission copay (including day surgery), and a tiered set of copays (up to $50) for prescription drugs. When I was in the hospital for a day last summer (2 ER visits plus outpatient surgery for a rather large kidney stone), my total out of pocket was about $400.

Health care in this country is very expensive, compared to most of the rest of the world, and based on our health data, not any better. It is expensive because of a series of choices that we've made as a society:

• We've decided that doctors should be able to make a lot of money. (Average salary for a urologist: $358,000.)
• We've decided that drug companies should be able to make a lot of money.
• We've decided to allow the food industry to dictate national nutrition polices.

Well somebody's got to pay for all this, and that somebody is us.

The question is, who.

Right now, every American who has enough income to be ineligible for Medicaid has to pay the same for health care. A hedge fund manager pays the same $10,000 or $20,000 per year in health costs as the person answering the phones. As a percentage of income, however, there's a gross imbalance. I see this at my own workplace. I pay the same health insurance premium as higher-paid employees (for whom it's a neglible expense) and lower-paid ones. In the case of lower-paid employees, rising health insurance premiums and copays can quickly eat up the bulk of any salary increases.

One of the potential hidden advantages (at least to my way of thinking) for government mandated/subsidized/funded health insurance plans is that they offer the opportunity to introduce some progressiveness into how this is paid for. Specifically, to the extent that high-income families pay income taxes at a higher rate than low-income families, the portion of government money used to subsidize national health insurance can act to reduce the burden of health care costs on low- and moderate-income Americans.

Coincidentally, in today's Journal there's an article about how hospitals are now demanding up-front payment of copays and deductibles before starting treatment:

LAKE JACKSON, Texas -- When Lisa Kelly learned she had leukemia in late 2006, her doctor advised her to seek urgent care at M.D. Anderson Cancer Center in Houston. But the nonprofit hospital refused to accept Mrs. Kelly's limited insurance. It asked for $105,000 in cash before it would admit her.

Sitting in the hospital's business office, Mrs. Kelly says she told M.D. Anderson's representatives that she had some money to pay for treatment, but couldn't get all the cash they asked for that day. "Are they going to send me home?" she recalls thinking. "Am I going to die?"